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The private equity industry remains uncertain of the strength of the economic recovery and is in a state of angst about its future form, judging by the sober and reflective mood at private equity conferences in Abu Dhabi and Copenhagen.

At the SuperReturn Middle East and the European Private Equity and Venture Capital Association conferences, industry heavyweights, including David Rubenstein of Carlyle Group and Advent International’s John Singer, held forth on topics including whether its lucrative fees should be reformed, whether the economy is recovering, the future of buyouts, and whether the industry needs to improve its public image.

David Rubenstein, co-founder of Carlyle Group, and Better Capital founder Jon Moulton added their voices to the fee debate, in some of the strongest comments made by buyout managers about their lucrative income stream.

Moulton said: “I am appalled at the lack of diversity of terms. Every other industry charges different fees for different products.”

Rubenstein predicted private equity would move away from its “one-size-fits-all fee model”, saying a market in fees was likely to emerge as the returns from recent funds became clear.

Investors question Middle East’s allure…

Some of the biggest international investors in private equity have questioned the allure of the Middle East and north Africa region, saying it was difficult to find attractive prices in an area that has provided little in the way of a long-term track record.

Juan Delgado-Moreira, managing director at Hamilton Lane, which manages private equity assets worth about $88bn, said: “The Mena region … has performed comparatively well over the last two to three years, but not over a time horizon of more than five years.”

…but buyout firms are optimistic

The Mena region came up “smelling of roses” compared with developed markets, according to Ahmed Heikal, chairman and founder of Mena-focused private equity firm Citadel Capital. He said: “Compared with western markets, this region comes out smelling like roses. The Middle East is one of the few places outside Asia that is growing.”

Omar Lodhi, executive director at Abraaj Capital, said the region had been “somewhat neglected” by investors, partly due to the attractiveness of “darling emerging markets” such as Brazil and China.

From Copenhagen

Oaktree head warns of second crisis

One of the industry’s best-known turnaround investors believes the lessons of the crisis have been forgotten.

Howard Marks, head of one of the biggest turnaround investors, warned low interest rates were pushing investors into riskier deals and the financial services industry was heading towards another crisis.

The Oaktree Capital Management chairman said: “I am shocked by the extent to which markets have come back … I am surprised how fast the lessons of 2008 have been forgotten.”

Top Advent executive argues for better industry future

John Singer, managing partner at Advent International, said the industry needed to work harder to sell its image and had to weed out excesses.

He warned the industry had to change the perception that private equity “is more interested in exits than in a company’s future” by rebuilding trust with investors, companies and the public.

However, he said the industry would not cave in to pressure from politicians and trade unions for buyout executives to work out of “charity”.

Referring to demands executives should be paid less, he said: “One thing we are not going to satisfy them on is that we should be doing this all for charity … That is not going to happen.”

EVCA names new chairman

Europe’s private equity trade body announced had lined up its next chairman. Karsten Langer, a European partner at US-based mid-­market firm Riverside Company, is taking the chair from Uli Fricke, founder of Triangle Venture Capital Group, next June.